reply brief of appellants jim hood, attorney general … · ii james a. bobo, msb # 3604 state of...
TRANSCRIPT
IN THE SUPREME COURT OF MISSISSIPPI
NO. 2018-SA-01259
JIM HOOD, ATTORNEY GENERAL
OF THE STATE OF MISSISSIPPI, ex rel.
THE STATE OF MISSISSIPPI, COMMISSIONER
OF REVENUE HERB FRIERSON, MISSISSIPPI
DEPARTMENT OF REVENUE APPELLANTS
v.
WINE EXPRESS, INC., BOTTLE DEALS, INC.,
GOLD MEDAL WINE CLUB APPELLEES
APPEAL FROM THE CHANCERY COURT OF
RANKIN COUNTY, MISSISSIPPI
_______________________________________
REPLY BRIEF OF APPELLANTS JIM HOOD, ATTORNEY
GENERAL OF THE STATE OF MISSISSIPPI, ex rel. THE STATE OF
MISSISSIPPI, COMMISSIONER OF REVENUE HERB FRIERSON,
MISSISSIPPI DEPARTMENT OF REVENUE _______________________________________
ORAL ARGUMENT REQUESTED
KRISSY C. NOBILE, MSB # 103577
STATE OF MISSISSIPPI
OFFICE OF THE ATTORNEY GENERAL
CIVIL LITIGATION DIVISION
Post Office Box 220
Jackson, MS 39205
Telephone No. (601) 359-3824
Counsel for Appellants
Additional counsel listed on next page
E-Filed Document Jul 22 2019 17:09:54 2018-SA-01259 Pages: 39
ii
JAMES A. BOBO, MSB # 3604
STATE OF MISSISSIPPI
OFFICE OF THE ATTORNEY GENERAL
CIVIL LITIGATION DIVISION
Post Office Box 220
Jackson, Mississippi 39205
Telephone: (601) 359-3822
Facsimile: (601) 359-2003
Email: [email protected]
DAVID J. CALDWELL, MSB # 100800
MISSISSIPPI DEPARTMENT OF REVENUE
Post Office Box 22828
Jackson, Mississippi 39225-2828
Telephone: (601) 923-7408
Facsimile: (601) 923-7423
Counsel for Appellants
iii
TABLE OF CONTENTS
TABLE OF CONTENTS ............................................................................................................... iii
TABLE OF AUTHORITIES ......................................................................................................... iv
SUMMARY OF THE REPLY ARGUMENT ................................................................................ 1
REPLY ARGUMENT .................................................................................................................... 3
I. SPECIFIC PERSONAL JURISDICTION IS PROPER IN MISSISSIPPI. ....................... 3
A. Technicalities in sales contracts specifying when title passes do not control the
jurisdictional analysis—especially in a State civil enforcement action. ....................... 4
(i) The cases of Charia v. Cigarette Racing Team, Inc. and Butler v. Beer Across
America do not advance Appellees’ position. .............................................................. 7
(ii) Neither the Chancery Court’s decision nor Appellees’ argument comports with
contemporary personal jurisdiction principles. .......................................................... 10
B. Mississippi’s long-arm statute is applicable. .............................................................. 11
C. Exercising specific jurisdiction comports with Due Process. ..................................... 17
(i) Appellees have minimum contacts with Mississippi. ................................................. 17
(ii) Maintaining suit in Mississippi is consistent with notions of fair play and substantial
justice. ......................................................................................................................... 22
II. THE DORMANT COMMERCE CLAUSE ARGUMENT CANNOT BE CONSIDERED
FOR THE FIRST TIME ON APPEAL, AND THE ARGUMENT IS OTHERWISE
MERITLESS. .................................................................................................................... 23
CONCLUSION ............................................................................................................................. 25
CERTIFICATE OF SERVICE ..................................................................................................... 28
iv
TABLE OF AUTHORITIES
FEDERAL CASES: Page(s)
ATEN Int’l Co. v. Emine Tech. Co.
261 F.R.D. 112 (E.D. Tex. 2009).............................................................................................. 6
Aurora Corp. of Am. v. Michlin Prosperity Co.
2015 WL 5768340 (C.D. Cal. Sept. 29, 2015) ........................................................................... 6
Autotronic Controls Corp. v. Davis Technologies
2005 WL 1683595 (W.D. Tex., 2005) ...................................................................................... 13
Burger King Corp. v. Rudzewicz
471 U.S. 462 (1985) .................................................................................................................. 11
Burnham v. Superior Court of Cal., County of Marin
495 U.S. 604 (1990) .................................................................................................................. 11
Butler v. Beer Across America
83 F. Supp. 2d 1261 (N.D. Ala. 2000) .................................................................................. 7, 10
Capsugel Belgium NV v. Bright Pharma Caps, Inc.
2015 WL 7185463 n.6 (D. Or. Nov. 13, 2015) ........................................................................... 6
Charia v. Cigarette Racing Team, Inc.
583 F.2d 184 (5th Cir. 1978) .................................................................................................. 7, 8
Cummins-Allison Corp. v. SBM Co.
2013 WL 12198835 (D. Haw. Jan. 28, 2013) ............................................................................. 6
Cycles, Ltd. v. Navistar Financial Corp.
37 F.3d 1088 (5th Cir. 1994) .................................................................................................... 15
Cycles, Ltd. v. Navistar Financial Corp.
91 F.3d 139 (5th Cir. 1996) ...................................................................................................... 15
v
Cycles, Ltd. v. W.J. Digby Inc.
889 F.2d 612 (5th Cir. 1989) ........................................................................................ 15, 16, 17
Daimler AG v. Bauman
571 U.S. 117 (2014) .......................................................................................................... 8, 9, 11
Department of Revenue of Ky. v. Davis
553 U.S. 328 (2008) .................................................................................................................. 24
Excel Plas, Inc. v. Sigmax Co.
2007 WL 2853932 n.11 (S.D. Cal. Sept. 27, 2007) .................................................................... 6
Fusionbrands, Inc. v. Suburban Bowery of Suffern, Inc., No. 1:12–cv–0229–JEC
2013 WL 5423106 (N.D. Ga. Sept. 26, 2013) .......................................................................... 19
Granholm v. Heald
544 U.S. 460 (2005) .................................................................................................................. 25
Helicopteros Nacionales de Colombia, S.A. v. Hall
466 U.S. 408 (1984) .................................................................................................................... 8
Illinois v. Hemi Grp.
622 F.3d 754 (7th Cir. 2010) .......................................................................................... 6, 12, 22
International Shoe v. Washington
326 U.S. 310 (1945) .......................................................................................................... 1, 5, 11
ITL Int’l, Inc. v. Constenla, S.A.
669 F.3d 493, 2012 WL 266987 (5th Cir. Jan. 31, 2012) ......................................................... 12
Jacobs Trading, LLC v. Ningbo Hicon Int’l Indus. Co.
872 F. Supp. 2d 838 (D. Minn. 2012) ......................................................................................... 6
L.C. Eldridge Sales Co., Ltd. v. Azen Manufacturing Pte., Ltd.
2013 WL 7964065 (E.D. Tex. 2013) .......................................................................................... 9
vi
Lofton v. Turbine Design, Inc.
100 F. Supp. 2d 404 (N.D. Miss. 2000) .............................................................................. 12, 13
Lott v. J.W. O’Connor & Co., Inc.
991 F. Supp. 785 (N.D. Miss. 1998) ......................................................................................... 13
LSI Indus. v. Hubbell Lighting, Inc.
232 F.3d 1369 (Fed. Cir. 2000)................................................................................................... 9
Lta, Inc. v. Breeck
2012 WL 12884873 (S.D. Miss. Apr. 25, 2012)....................................................................... 14
Luv N’ Care, Ltd. v. Insta-Mix, Inc.
438 F.3d 465 (5th Cir. 2006) ........................................................................................................ 4, 5
Mink v. AAAA Dev. LLC
190 F.3d 333 (5th Cir. 1999) .................................................................................................... 12
Mississippi Interstate Express, Inc. v. Transp., Inc.
681 F.2d 1003 (5th Cir. 1982) .................................................................................................. 18
New Energy Co. of Ind. v. Limbach
486 U.S. 269 (1988) .................................................................................................................. 24
North American Philips Corp. v. American Vending Sales, Inc.
35 F.3d 1576 (Fed. Cir. 1994)..................................................................................................... 6
Nuovo Pignone, SpA v. STORMAN ASIA M/V
310 F.3d 374 (5th Cir. 2002) ...................................................................................................... 8
Outdoor Venture Corp. v. Ronald Mark Assocs., Inc.
2013 WL 2147854 (E.D. Ky. May 15, 2013) ............................................................................. 6
Owsalt v. Scripto, Inc.
616 F.2d 191 (5th Cir. 1980) ...................................................................................................... 5
vii
Pennoyer v. Neff
95 U.S. 714 (1878) .................................................................................................................... 11
People of Ill. ex rel. Madigan v. Hemi Grp., LLC
2008 WL 4545349 (C.D. Ill. Oct. 10, 2008) ................................................................... 6, 10, 12
Plixer International, Inc. v. Scrutinizer GmbH
905 F.3d 1 (1st Cir. 2018) ......................................................................................................... 21
R. Clinton Const. Co. v. Bryant & Reaves, Inc.
442 F. Supp. 838 (N.D. Miss. 1977) ......................................................................................... 20
Reed v. Biomet Orthopedics, Inc.
2008 WL 1735162 (W.D. La. Mar. 6, 2008) .............................................................................. 6
Renner v. Lanard Toys Ltd.
33 F.3d 277 (3d Cir. 1994).......................................................................................................... 6
Retail Coach v. r360, LLC
2017 WL 875831 (N.D. Miss. Mar. 3, 2017) ............................................................... 12, 14, 18
Revell v. Lidov
317 F.3d 467 (5th Cir. 2002) .................................................................................................... 19
Rice v. PetEdge, Inc.
975 F. Supp. 2d 1364 (N.D. Ga. 2013) ..................................................................................... 19
Robinson v. Bartlow
2012 WL 4718656 (W.D. Va. 2012) .................................................................................... 6, 19
Rudolph v. Topsider Bldg. Sys., Inc.
2007 WL 2156089 (D. Haw. July 24, 2007)............................................................................... 6
Ruston Gas Turbines, Inc. v. Donaldson Co., Inc.
9 F.3d 415 (5th Cir. 1993) .................................................................................................... 5, 13
viii
Sarvint Techs., Inc. v. Omsignal, Inc.
161 F. Supp. 3d 1250 (N.D. Ga. 2015) ..................................................................................... 19
Shaffer v. Heitner
433 U.S. 186 (1977) .......................................................................................................... 8, 9, 11
Shippitsa Limited v. Slack
2019 WL 277613 (N.D. Tex., 2019) ......................................................................................... 20
South Dakota v. Wayfair, Inc.
138 S. Ct. 2080 (U.S. 2018) ...................................................................................................... 22
State of Alaska v. U.S. Dep’t of Transp.
868 F.2d 441 (D.C. Cir. 1989) .................................................................................................. 17
State of Wash., Dept. of Rev. v. www.dirtcheapcig.com, Inc.
260 F. Supp. 2d 1048 (W.D. Wash. 2003) ................................................................................ 12
Stomp, Inc. v. NeatO, LLC
61 F. Supp. 2d 1074 (C.D. Cal. 1999) .......................................................................................... 19
Strong Pharm. Labs., LLC v. Trademark Cosmetics, Inc.
2006 WL 2033138 (D. Md. July 17, 2006)................................................................................. 6
Tempur-Pedic Intern., Inc. v. Go Satellite Inc.
758 F. Supp. 2d 366 (N.D. Tex. 2010) ..................................................................................... 21
Tennessee Wine and Spirits Retailers Association v. Thomas
139 S. Ct. 2449 (U.S. 2019) ................................................................................................ 24, 25
Thompson v. Chrysler Motors Corp.
755 F.2d 1162 (5th Cir. 1985) .................................................................................................... 8
U.S. Technology Corporation v. MDEQ
2016 WL 4098609 (S.D. Miss. July 28, 2016) ......................................................................... 24
ix
United Haulers Ass’n., Inc. v. Oneida–Herkimer Solid Waste Mgmt. Auth.
550 U.S. 330 (2007) .................................................................................................................. 24
Variant, Inc. v. Flexsol Packaging Corp., No. 6:08 CV 478
2009 WL 3082581 (E.D. Tex. Sept. 21, 2009) ......................................................................... 19
Vermont Agency of Natural Res. v. United States ex rel. Stevens
529 U.S. 765 (2000) .................................................................................................................. 17
Wilden Pump & Engineering Co. v. Versa-Matic Tool Inc.
1991 WL 280844 (C.D. Cal. July 29, 1991) ............................................................................... 6
World-Wide Volkswagen Corp. v. Woodson
444 U.S. 286 (1980) .................................................................................................................. 18
Zing Bros., LLC v. Bevstar, LLC, No. 2:11–cv–00337 DN
2011 WL 4901321 (D. Utah Oct. 14, 2011) ............................................................................. 19
Zippo Mfg. Co. v. Zippo Dot Com, Inc.
952 F. Supp. 1119 (W.D. Pa. 1997) ....................................................................................... passim
STATE CASES:
American Cable Corp. v. Trilogy Communications, Inc.
754 So. 2d 545 (Miss. App. 2000) ............................................................................................ 18
Book v. Doublestar Dongfeng Tyre Co.
860 N.W.2d 576 (Iowa 2015) ..................................................................................................... 5
Dunn v. Yager
58 So. 3d 1171 (Miss. 2011) ..................................................................................................... 19
Estate of Jones v. Phillips
992 So. 2d 1131 (Miss. 2008) ................................................................................................... 12
Ex parte Lagrone
839 So. 2d 620 (Ala. 2002) ............................................................................................ 5, 10, 21
x
H. Heller & Co. v. Louisiana-Pac. Corp.
209 S.W.3d 844 (Tex. App. 2006) .............................................................................................. 5
Hartford Acc. & Indem. Co. v. Delta & Pine Land Co.
188 So. 539 (Miss. 1939) .......................................................................................................... 14
Miller v. Glendale Equip. & Supply, Inc.
344 So. 2d 736 (Miss. 1977) ..................................................................................................... 15
Mississippi State Fed. of Colored Women’s Club Housing v. L.R.
62 So. 3d 351 (Miss. 2010) ....................................................................................................... 23
Powers v. Tiebauer
939 So.2d 749 (Miss.2005) ....................................................................................................... 23
Sheridan, Inc. v. C. K. Marshall & Co.
360 So. 2d 1223 (Miss. 1978) ................................................................................................... 14
St. Paul Mercury Ins. Co. v. Merchants & Marine Bank
882 So. 2d 766 (Miss. 2004) ....................................................................................................... 5
Starbrite Distributing, Inc. v. Excelda Mfg. Co.
562 N.W.2d 640 (Mich. 1997) .................................................................................................... 5
Williams v. Skelton
6 So. 3d 428 (Miss. 2009) ......................................................................................................... 23
CONSTITUTIONAL PROVISIONS AND STATUTES:
U.S. CONST. art. I, § 8, cl. 3 .......................................................................................................... 23
MISS. CODE ANN. § 13-3-57.............................................................................................. 11, 14, 15
MISS. CODE ANN. § 41-29-136........................................................................................................ 2
MISS. CODE ANN. § 67-1-83(1) ..................................................................................................... 24
MISS. CODE ANN. § 41-29-113........................................................................................................ 2
MISS. CODE ANN. § 41-29-136........................................................................................................ 2
xi
MISS. CODE ANN. § 67-1-1.............................................................................................................. 4
OTHER AUTHORITIES:
MISS. R. APP. P. 35-B(b) ................................................................................................................. 7
Jurisdiction to Adjudicate: A Suggested Analysis, 79 HARV. L. REV. 1121, 1144–64 (1966) ......... 7, 8
1
SUMMARY OF THE REPLY ARGUMENT
Recognizing that their argument reflects a vision of personal jurisdiction at odds with case
law on both the federal and state level, Appellees change tactics on appeal and inject a new argument
into their brief. See App. Br. at 1, 18-19. Now, the argument is that the State is barred from enforcing
its beverage control laws not only in its courts, but in all courts—because those laws purportedly
violate the Dormant Commerce Clause.
They do not. But this Court need not reach the Dormant Commerce Clause issue in this
appeal. That federal constitutional challenge to this State’s laws was not raised, briefed, or addressed
by the lower court. The argument thus should be dispensed with quickly because this Court shouldn’t
consider it at all. But, to be certain, Mississippi’s law quite easily passes constitutional muster. This
is so because the law treats in-state and out-of-state businesses the same. In other words, all direct-
to-consumer shipments of alcoholic beverages are prohibited.
Nevertheless, as soon as this case is remanded back to the Chancery Court of Rankin County,
Appellees then may raise a Dormant Commerce Clause argument if they want. In fact, they may do
so for an obvious reason: because the repeated and knowing violations of the State’s laws subject
Appellees to specific personal jurisdiction in the courts of Mississippi.
Try as they might (or, more accurately, try as they barely do) to get this Court to say
otherwise, Appellees fail to provide any analysis consistent with any version of any jurisdictional
test set forth by any court. For example, despite that the seminal decision of International Shoe v.
Washington, 326 U.S. 310 (1945) itself rejected the argument that an “FOB” term in a sales contract
defeats personal jurisdiction, Appellees don’t grapple with that case at all. Or even cite to it.
Yet that case and a myriad of lower court cases make clear that the jurisdictional inquiry does
not turn on FOB terms or other technicalities in sales contracts. Nor do such contractual terms allow
2
Appellees to knowingly violate state law with impunity. In fact, the upshot of Appellees’ argument
would be a radical one: Purposefully ship anything you want into Mississippi as often as you want—
just make sure you place the words “FOB Shipping Point” somewhere in fine print before you do.
Not surprisingly, such a holding would indeed put this Court at odds with federal and state
courts around the country, including the U.S. Supreme Court. In fact, it is axiomatic that States have
the power to control their borders when products—e.g., alcohol, defective products, marijuana,
untaxed cigarettes, opioids—are destined for delivery into the State.1 This is especially so when the
Twenty-First Amendment is added to the analytical mix, as it is here.
Here, each Appellee purposefully availed itself of Mississippi business opportunities by
selling alcohol to Mississippi consumers via interactive websites through which Mississippi
consumers could select alcohol, calculate shipping costs, and submit payments. Further, there were
a multitude of transactions with Mississippi consumers. See State’s Br. at 15-16. Worse still,
Appellees profited thousands of dollars from their knowing violations of state law. And none of the
sales and shipments of alcoholic beverages into Mississippi were performed unilaterally by the
consumers.
Instead, each Appellee directed the shipment of alcohol to consumers located in Mississippi
by (i) acting on the “buyer’s behalf” to ship the alcohol; (ii) selecting/engaging a common carrier to
transport the alcohol; and (iii) “arranging” for the transportation of the alcohol to residential
addresses in Mississippi. See ROA.81 (Gold Medal Terms and Conditions) (“By placing an order,
1 The two amici briefs filed in support of Appellees contend that it doesn’t matter if the State is
powerless to stop shipments of marijuana because marijuana is still illegal under federal law. While true, the
State regulates marijuana as well. MISS. CODE ANN. §§ 41-29-113, 41-29-136. For example, in 2014, the State
passed HB 1231. Known as “Harper Grace’s Law,” the bill provides legal protection to patients diagnosed with
a “debilitating epileptic condition or related illness” in certain circumstances. MISS. CODE ANN. § 41-29-136.
Further, as it relates to alcohol regulation (and thus unlike marijuana), the Twenty-First Amendment
gives States the authority to address alcohol-related public health and safety issues. See infra pp. 24-25; see
also State’s Br. at 6-10, 47-49.
3
buyer authorizes seller to act on buyer’s behalf in arranging for transportation of the wine at the
buyer’s direction.”); ROA.99 (Wine Express) (““By placing an order, you authorize us to act on
your behalf to engage a common carrier to deliver your order to you.”); ROA.125 (Bottle Deals)
(“We will then arrange a common carrier for shipment….”) (Emphasis supplied).
These activities constitute purposeful availment in Mississippi and satisfy the “minimum
contacts” inquiry. The chancery court’s unreasoned decision to the contrary must be reversed.
REPLY ARGUMENT
I. SPECIFIC PERSONAL JURISDICTION IS PROPER IN MISSISSIPPI.
As sophisticated companies running commercial websites, Appellees had fair warning that
Mississippi (like all states) has laws governing the distribution of alcohol, and that they could be haled
into a Mississippi court for repeatedly violating those laws. To be sure, Appellees’ brief is divorced
from a proper jurisdictional analysis, and they do not (because they cannot) dispute any of the following:
Appellees operate interactive and
commercial websites and entered contracts
with Mississippi residents.
Appellees created accounts via their websites for
Mississippi consumers, and sent emails.
Appellees sold alcohol to Mississippi
residents located in Mississippi via their
interactive websites.
Appellees directed alcohol to be shipped and
delivered to Mississippi addresses, including to
minors and to consumers in “dry” counties.
Appellees expressly acted on the buyer’s
behalf to ship alcohol, engage a common
carrier, and arrange for transportation of
the alcohol into the State.
Appellees knowingly directed the shipments of
alcohol to Mississippi residents, and allowed
Mississippi customers to calculate shipping
charges by using Mississippi zip codes.
Appellees chose to conduct business in a
highly regulated area of law, and knew
Mississippi prohibits direct-to-consumer
shipments of alcohol.
Appellees collectively profited more than
$200,000 in a short period of time by violating
State law, and they each owe thousands of dollars
in unpaid taxes.
See State’s Br. at 15-16, 43.2
2 Instead of confronting the relevant facts and the law, Appellees retort is to contend that the text on
page 14 of the State’s brief must be stricken. First, record cites are provided on page 14 of the State’s brief. State
4
By ignoring these undisputed facts and personal jurisdiction implications, the chancery court
seriously erred in a serious way. When companies choose to purposefully conduct business and derive
benefit from interactions with consumers that they know to be Mississippi citizens, in violation of
Mississippi law, it does not offend traditional notions of fair play and substantial justice to allow the
State to maintain suit against such companies in Mississippi.
A. Technicalities in sales contracts specifying when title passes do not control the
jurisdictional analysis—especially in a State civil enforcement action.
Appellees continue to invoke contractual shipping terms as an end-run around a proper
personal jurisdiction analysis. Indeed, on nearly every page of their brief, they repeat some version of
the tired mantra that this case is “governed by the UCC” and that FOB terms defeat personal
jurisdiction. See App. Br. at 1. For good reason, though, courts uniformly have rejected such
arguments—even in commercial transaction disputes that are substantively governed by the UCC.
Yet this is not a commercial transactions case, and the UCC doesn’t even control the
substantive law. This is a civil enforcement action brought by the State under Mississippi’s Local
Option Alcoholic Beverage Control Law, Miss. Code § 67-1-1 et. seq. Thus, the substantive provisions
of the State’s Local Option Law are the ones that govern—for it is that law that has been violated.
As the Fifth Circuit has put it, “the primary purpose of a F.O.B. term is to allocate the risk of
damage to goods between buyer and seller.” Luv N’ Care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 471 (5th
Cir. 2006). But, here, the substantive issue has nothing to do with damaged goods—in fact, whether the
shipment of alcohol was damaged in transit matters none to the State’s enforcement action. Stated
Br. at 14 (citing ROA.171-172, 182-183, 197-198). Second, to the extent Appellees meant only to refer to note
16, they’re still wrong. That footnote was for illustrative purposes because it is something in the public domain.
Nonetheless, the record itself provides the same information. See ROA.171-172, 182-183, 197-198 (explaining
that, through its investigation, the State discovered that most Internet wine retailers place on their website(s)
filters that refuse orders that request shipments of alcohol into Mississippi. But not so with the Appellees).
5
differently, importing and knowingly directing shipments of alcohol to consumers in Mississippi
violated Mississippi law—irrespective of whether the bottles of alcohol were damaged or not.
Yet this isn’t to say that the UCC doesn’t play a vital part of Mississippi law generally. It does.
Indeed, the UCC, which is written in terms of current commercial practices, serves to meet the
contemporary needs of a fast-moving commercial society. See St. Paul Mercury Ins. Co. v. Merchants
& Marine Bank, 882 So. 2d 766, 770 (Miss. 2004). So, if this case involved a contractual dispute over
the sale of goods between two parties to the contract, then Appellees (and their amicus) might be right.
In that instance, the matter would be a UCC case—at least for purposes of substantive law.
Yet this case isn’t that. And the provisions of the UCC are altogether inapposite to the State’s
civil enforcement action pursuant to its beverage controls laws. Moreover, even in disputes between
parties to business transactions substantively governed by the UCC, courts at every level still reject the
argument that provisions of the UCC control the jurisdictional inquiry. These cases include:
THE U.S.
SUPREME
COURT
International Shoe v. Washington, 326 U.S. 310 (1945) (rejecting the argument that an
FOB term in a contract controls the “minimum contacts” analysis).
STATE HIGHER
COURTS
H. Heller & Co. v. Louisiana-Pac. Corp., 209 S.W.3d 844, 853 (Tex. App. 2006); Book
v. Doublestar Dongfeng Tyre Co., 860 N.W.2d 576, 597 (Iowa 2015); Ex parte Lagrone,
839 So. 2d 620, 627 (Ala. 2002) (“The mere fact that Fisher Products delivered its products
‘F.O.B. Hartwell, Georgia,’ is not dispositive[.]”); Starbrite Distributing, Inc. v. Excelda
Mfg. Co., 562 N.W.2d 640, 642 (Mich. 1997) (agreeing that “the U.C.C. had other
concerns in mind, certainly not jurisdictional ones”).
FEDERAL
CIRCUIT
COURTS
Luv N’ Care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 470–72 (5th Cir. 2006) (“F.O.B. term
does not prevent. . .personal jurisdiction[.]”); Ruston Gas Turbines, Inc. v. Donaldson Co.,
Inc., 9 F.3d 415, 417 (5th Cir. 1993) (personal jurisdiction proper even though the
defendant shipped items FOB from Minnesota and claimed that “all of its actions related
to its contract [ ] occurred in Minnesota”); Owsalt v. Scripto, Inc. 616 F.2d 191, 197 n.8
(5th Cir. 1980) (“jurisdiction does not depend on the technicalities of when title passes”).
Illinois v. Hemi Grp., 622 F.3d 754, 757–59 (7th Cir. 2010) (“Even if the sales technically
occurred in New Mexico under commercial law…Hemi allegedly violated Illinois
law…the legal location of the sales contract is not dispositive of [ ] jurisdiction[.]”);
6
Renner v. Lanard Toys Ltd., 33 F.3d 277, 282 (3d Cir. 1994) (Nothing “suggests that the
fact that a foreign manufacturer or seller rids itself of title by a sale F.O.B. a foreign port
is enough to insulate that manufacturer or seller from jurisdiction. . . .”); North American
Philips Corp. v. American Vending Sales, Inc., 35 F.3d 1576, 1579-80 (Fed. Cir. 1994)
(“Appellees have pointed to no policy that would be furthered by according controlling
significance to the passage of legal title here. This case has nothing to do…with the proper
allocation of the risk of loss between parties to the underlying sales contracts”).
FEDERAL
DISTRICT
COURTS
Rudolph v. Topsider Bldg. Sys., Inc., 2007 WL 2156089, at *4 (D. Haw. July 24, 2007);
Cummins-Allison Corp. v. SBM Co., 2013 WL 12198835, at *7 (D. Haw. Jan. 28, 2013);
Reed v. Biomet Orthopedics, Inc., 2008 WL 1735162, at *9 (W.D. La. Mar. 6, 2008);
Aurora Corp. of Am. v. Michlin Prosperity Co., 2015 WL 5768340, at *6 (C.D. Cal. Sept.
29, 2015); Jacobs Trading, LLC v. Ningbo Hicon Int’l Indus. Co., 872 F. Supp. 2d 838,
844 (D. Minn. 2012); Excel Plas, Inc. v. Sigmax Co., 2007 WL 2853932, at *8 n.11 (S.D.
Cal. Sept. 27, 2007); Capsugel Belgium NV v. Bright Pharma Caps, Inc., 2015 WL
7185463, at *5 n.6 (D. Or. Nov. 13, 2015); Robinson v. Bartlow, 2012 WL 4718656, at
*4 (W.D. Va. 2012); Wilden Pump & Engineering Co. v. Versa-Matic Tool Inc., 1991 WL
280844, at *3 (C.D. Cal. July 29, 1991); People of Ill. ex rel. Madigan v. Hemi Grp., LLC,
2008 WL 4545349, at *4 (C.D. Ill. Oct. 10, 2008); Outdoor Venture Corp. v. Ronald Mark
Assocs., Inc., 2013 WL 2147854, at *8 (E.D. Ky. May 15, 2013) (“It is also disingenuous
for RMA to suggest that it did not purposefully avail itself of the privilege of operating in
Kentucky simply because it delivered the fabric F.O.B. Hillside, New Jersey….”); ATEN
Int’l Co. v. Emine Tech. Co., 261 F.R.D. 112, 119–20 (E.D. Tex. 2009) (“The contractual
shipping arrangement that Emine has with its customers is irrelevant…”); Strong Pharm.
Labs., LLC v. Trademark Cosmetics, Inc., 2006 WL 2033138, at *7 (D. Md. July 17, 2006)
(“Defendant’s emphasis on the fact that the goods it manufactured for Plaintiff were
shipped Free On Board (“FOB”) is misplaced. . .”).
All in all, then, contractual shipping arrangements do not govern the jurisdictional analysis
even in cases substantively governed by the UCC.3 And they certainly do not govern here—in a case
brought by the State and not substantively governed by the UCC.4
3 Appellees complain that some of the cases cited to by the State are “unpublished.” App. Br. at 2. To
be clear on this Court’s rules regarding case citations, MRAP 35-B(b) provides that Mississippi state court cases
“decided prior to the effective date of this rule which have not been designated for publication shall not be
cited[.]” That rule was effective in 1996 and amended in 1998, so it only applies to cases decided before then.
Plus, that rule only concerns this State’s “appellate court[ ]” opinions. See Cmt. to Rules 35-A and 35-B.
In part, though, Appellees are right about the litany of cases cited by the State. The State cited to cases
that are published and unpublished; cases from state and federal courts; and cases from the U.S. Supreme Court,
appellate courts, and trial courts. The point is that no court agrees with the unreasoned decision issued by the
Rankin County Chancery Court here.
4 On page 2 of Wine Freedom’s amicus brief, they declare: “The Uniform Commercial Code is as alive
in Mississippi as it is in New York or California.” They are correct. In fact, all current Mississippi law is alive—
when it is applicable and when it governs the substantive dispute. That’s just not the case here as to the UCC.
And the UCC doesn’t control the jurisdictional inquiry in any event. Relatedly, despite the hyperbolic language
7
i. The cases of Charia v. Cigarette Racing Team, Inc. and Butler v. Beer Across
America do not advance Appellees’ position.
Appellees continue to rely almost exclusively on Charia v. Cigarette Racing Team, Inc., 583
F.2d 184 (5th Cir. 1978) and Butler v. Beer Across America, 83 F. Supp. 2d 1261 (N.D. Ala. 2000).
The State again addresses both of these cases—but neither supports Appellees’ position.
The Fifth Circuit’s 1978 Decision in Charia. To recap the background, the defendant in
Charia was a brick-and-mortar Florida boatbuilding corporation—not an Internet retailer. The plaintiff
wrote to the Florida defendant, visited the Florida boatbuilding plant in Florida, and had face-to face
discussions and ordered a boat in Florida. The boat was then shipped “F.O.B. Miami, Florida” to
Louisiana. After delivery, the plaintiff experienced problems with the boat and sued. And eventually
the case was dismissed on personal jurisdiction grounds.
In contrast to the Appellees’ activities, though, the Fifth Circuit in Charia reasoned: “Cigarette
sold four boats in Louisiana in a 5-year period, sales which we consider, in the circumstances of this
case, to be isolated and sporadic.” Id. at 189. Further, and more importantly, in considering the
circumstances of that case, the Charia court analyzed only general jurisdiction.
In fact, given that Charia was decided in 1978, “specific jurisdiction” was not discussed at all.
This is so because Charia was decided prior to the development in Supreme Court jurisprudence
drawing distinctions between general and specific jurisdiction. Nuovo Pignone, SpA v. STORMAN
ASIA M/V, 310 F.3d 374, 380 n.4 (5th Cir. 2002) (abrogated on other grounds); Thompson v. Chrysler
Motors Corp., 755 F.2d 1162, 1170-1172 (5th Cir. 1985) (distinguishing Charia and “more clearly
draw[ing] the distinction” between specific and general jurisdiction) (citing Helicopteros Nacionales
in Wine Freedom’s briefing (e.g., “Appellant’s attack is on not on wine [sic] but on an essential part of the United
States legal system”), see Wine Freedom Br. at 7, they curiously don’t address the cases, like the ones in the
above chart, cited by the State. Nor do they even try to grapple with the fact that International Shoe itself rejected
the argument they urge.
8
de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n.8 (1984) (citing von Mehren & Trautman, Jurisdiction
to Adjudicate: A Suggested Analysis, 79 HARV. L. REV. 1121, 1144–64 (1966)).
As discussed in footnote 39 of the State’s opening brief, the distinction between “general” and
“specific” jurisdiction is generally attributed to Professors von Mehren and Trautman, writing in 1966.
See Helicopteros Nacionales, 466 U.S. at 414 n.8. That writing was cited in Shaffer v. Heitner, 433
U.S. 186, 205 (1977), but Shaffer did not specifically reference the distinction between general and
specific jurisdiction. It was not until 1984, in Helicopteros Nacionales, that the Court cited to the
Professors on the differences between general and specific jurisdiction. 466 U.S. at 414 n.8.
The Supreme Court more recently has discussed the distinction between specific and general
jurisdiction. Daimler AG v. Bauman, 571 U.S. 117, 127 (2014). “Adjudicatory authority. . . in which
the suit ‘aris[es] out of or relate[s] to the defendant’s contacts with the forum’. . . is today called
‘specific jurisdiction.’” Id. (internal quotation marks and citation omitted). On the other hand, “[a]
court may assert general jurisdiction over foreign (sister-state or foreign-country) corporations to hear
any and all claims against them when their affiliations with the State are so ‘continuous and systematic’
as to render them essentially at home in the forum State.” Id. (internal quotations and citations omitted).
In other words, “[s]pecific jurisdiction ’arises out of’ or ‘relates to’ the cause of action even if
those contacts are ‘isolated and sporadic.’ . . . General jurisdiction arises when a defendant maintains
‘continuous and systematic’ contacts with the forum state even when the cause of action has no relation
to those contacts.” LSI Indus. v. Hubbell Lighting, Inc., 232 F.3d 1369, 1375 (Fed. Cir. 2000)
(emphasis supplied) (quoting Burger King and Helicopteros Nacionales); L.C. Eldridge Sales Co., Ltd.
v. Azen Manufacturing Pte., Ltd., 2013 WL 7964065, at *1 (E.D. Tex. 2013) (“Isolated and sporadic
contacts suffice, so long as those contacts arise out of or relate to the plaintiff’s cause of action.”).
9
Thus, the “isolated and sporadic” language in Charia was in reference to, and in the context
of, a general jurisdiction analysis—not a specific jurisdiction inquiry, which is what is at issue here.
Cf. Daimler AG, 571 U.S. at 127–28 (noting that “specific jurisdiction has become the centerpiece of
modern jurisdiction theory, while general jurisdiction [has played] a reduced role”) (internal quotations
omitted). Further, unlike here, there was no website interactivity in Charia, no violations of state law,
and overall there were very few sales and contacts with the forum state.
Lastly, as to the FOB argument, it was the plaintiff in Charia relying on an FOB term to
support jurisdiction. Id. at 188. The plaintiff contended that jurisdiction was proper because the
defendant “indirectly ship[ed] its product into Louisiana[.]” Id. Put differently, the plaintiff there
invoked an FOB term to try to establish jurisdiction when there was otherwise a lack of forum contacts.
The argument in Charia is thus the opposite of the argument urged in this case. Here, Appellees
wrongly seek to use an FOB term to circumvent specific jurisdiction when there are otherwise more
than sufficient contacts with the forum—and those contacts relate to the cause of action.
The Alabama District Court’s Decision in Butler. The other primary case relied on is Butler
v. Beer Across America, 83 F. Supp. 2d 1261 (N.D. Ala. 2000). There, the parents of a minor brought
an action against an Illinois defendant seeking damages for the single sale of beer to their minor son.
Id. The Butler court applied Zippo and determined that the website was akin to “an electronic version
of a postal reply card.” Id. at 1268. Here, by contrast, Appellees’ commercial websites are as interactive
as it gets under Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997).
What’s more, the sales and shipments of alcoholic beverages into Mississippi were not
performed unilaterally by the buyers and consumers of the alcohol. See ROA.81 (Gold Medal Terms
and Conditions); ROA.99 (Wine Express); ROA.125 (Bottle Deals). And, unlike Butler, this case is
an action brought by the State to enforce the repeated and knowing violations of state law.
10
Plus, Appellees rely on footnote 6 of the Butler decision, which construed applicable provisions
of Alabama state law vis-à-vis FOB terms and that state’s version of the UCC. See Butler, 83 F. Supp.
2d at 1264 n.6. However, two years after the Butler case was decided, the Alabama Supreme Court
held that FOB terms do not control the jurisdictional inquiry. Ex parte Lagrone, 839 So. 2d 620, 627
(Ala. 2002) (finding personal jurisdiction and explaining that “[t]he mere fact that Fisher Products
delivered its products ‘F.O.B. Hartwell, Georgia,’ is not dispositive.”).
In short, the attempt to stretch Charia and Butler to mean something more than they do falls
flat. And the quantity and regularity of shipments by Appellees, as well as the purposeful shipment of
alcohol to known destination addresses in Mississippi, makes specific jurisdiction proper.
ii. Neither the Chancery Court’s decision nor Appellees’ argument comports
with contemporary personal jurisdiction principles.
According to Appellees, using a third-party carrier to knowingly send shipments of alcohol to
Mississippi absolves them of their contacts with the State. Under Appellees’ position, then, for personal
jurisdiction to be proper, Internet wine retailers need to personally deliver and physically transport
alcohol into the geographic bounds of the Mississippi forum. But such a position falls out of step with
the contemporary inquiry for personal jurisdiction.
Indeed, Appellees seek to rewind the last 141 years and return to the rigid territorial framework
of Pennoyer v. Neff, 95 U.S. 714 (1878). In Pennoyer, decided shortly after the enactment of the
Fourteenth Amendment, the Court held that a tribunal’s jurisdiction over persons reaches no farther
than the geographic bounds of the forum. Id. at 720 (“The authority of every tribunal is necessarily
restricted by the territorial limits of the State[.]”); Shaffer v. Heitner, 433 U.S. 186, 197 (1977).
In time, however, Pennoyer’s strict territorial approach yielded to a less rigid understanding,
spurred by “changes in the technology of transportation and communication, and the tremendous
growth of interstate business activity.” Burnham v. Superior Court of Cal., County of Marin, 495 U.S.
11
604, 617 (1990) (opinion of Scalia, J.). And International Shoe reflects one of the first steps in the
“momentous departure from Pennoyer’s rigidly territorial focus[.]” Daimler AG, 571 U.S. at 128.
When “a commercial actor’s efforts are ‘purposefully directed’ toward residents of another
State, we have consistently rejected the notion that an absence of physical contacts can defeat personal
jurisdiction there.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985). In fact, jurisdictional
analysis is not susceptible to mechanical tests, International Shoe, 326 U.S. at 319, and due process is
not intended to act as a “territorial shield” whereby a defendant can escape jurisdiction through artful
structuring of commercial relations, Burger King, 471 U.S. at 473-74.
Consequently, an FOB term in a sales contract does not mechanically preclude a court from
exercising jurisdiction. And, at the end of the day, if Appellees didn’t want to come to court in
Mississippi, they shouldn’t have knowingly and repeatedly shipped alcohol into this State.
B. Mississippi’s long-arm statute is applicable.
As discussed, the three prongs of the long-arm statute are commonly referred to as the doing-
business prong, the contract prong, and the tort prong. MISS. CODE ANN. § 13-3-57. All are satisfied here.
Doing Business Prong. One is deemed to be “doing business” if they “perform any character
of work or service in this state.” ITL Int’l, Inc. v. Constenla, S.A., 669 F.3d 493, 497-98, 2012 WL
266987, at *3 (5th Cir. Jan. 31, 2012); Estate of Jones v. Phillips, 992 So. 2d 1131, 1139 (Miss. 2008));
Retail Coach v. r360, LLC, 2017 WL 875831, at *3 (N.D. Miss. Mar. 3, 2017). Appellees’ acts of
“doing business” include the operation of interactive websites and knowing sales to the forum state.
Each Appellee operates a commercial, interactive website through which Mississippi
customers can purchase alcohol, calculate shipping charges using Mississippi zip codes, and create
customer accounts. When a defendant transacts business through a website by engaging in transactions
12
with forum residents, and by entering into contracts over the Internet, specific personal jurisdiction is
proper. Mink v. AAAA Dev. LLC, 190 F.3d 333, 337 (5th Cir. 1999).
The key distinguishing feature of a fully interactive website which yields personal jurisdiction
is the ability to allow consumers to order or purchase products and services online. Mink, 190 F.3d at
337. In this case, Appellees made repeated and knowing online sales to customers located in
Mississippi. Cf. People of Ill. ex rel. Madigan v. Hemi Grp., LLC, 2008 WL 4545349 (C.D. Ill. Oct.
10, 2008); Illinois v. Hemi Grp. LLC, 622 F.3d 754, 757–58 (7th Cir. 2010); State of Wash., Dept. of
Rev. v. www.dirtcheapcig.com, Inc., 260 F. Supp. 2d 1048 (W.D. Wash. 2003) (considering the
“transaction of any business” prong of Washington’s long arm and holding that website provided
grounds for specific jurisdiction); see also State Br. at 27-36 and n.29, 30.
As a result, the commercially interactive websites at issue here are at the opposite end of the
spectrum as the websites in the cases relied on by Appellees, such as Lofton v. Turbine Design, Inc.,
100 F. Supp. 2d 404 (N.D. Miss. 2000). See App. Br. at 12-13. In Lofton, the court first found that the
state long-arm statute was applicable. Id. at 409. But, in Lofton, the minimum contacts test wasn’t
satisfied when the defendant’s website was evaluated under Zippo.
However, this was because the website “was used solely as an advertising tool. . .not suited for
shopping or ordering online.” Id. at 410 (“The website does not contain a price list for services, contract
for engagement of services, or order form. It is not suited for shopping or ordering online. It does not
even offer the opportunity to receive a quote as to costs [.]”). By contrast, the websites at issue here are
interactive and designed to allow (and did allow) shopping and ordering online.
Further, the volume and regular repeated sales to Mississippi residents, in violation of state
law, are more than enough to satisfy this prong of the long-arm statute.5 Indeed, there were a multitude
5 Appellees also rely on Lott v. J.W. O’Connor & Co., Inc., 991 F. Supp. 785, 785 (N.D. Miss. 1998).
But the complaint in that case stemmed from an injury sustained by a Mississippi resident after falling in the
13
of unlawful sales into the State in a short person of time. Specifically, Gold Medal effectuated 2,556
transactions with Mississippi residents located in Mississippi; Wine Express engaged in 189 such
transactions; and Bottle Deals engaged in 51 such transactions.6 See State’s Br. at 15-16.
Importantly, too, Appellees (and their amicus) ignore that they each acted on the buyer’s half
and arranged for the transportation of alcohol to consumers they knew were located in Mississippi. For
instance, amicus Wine Freedom proclaims that the Appellees’ “only contact with Mississippi was the
consumer bringing the product into the state.” See Amicus Wine Freedom Br. at 7.
This isn’t even close to accurate. Indeed, it pays only short shrift to the interactivity of the
websites, the knowing violations of state law, and that none of the sales and shipments of alcohol
into Mississippi were performed unilaterally by the consumers. See ROA.81 (Gold Medal Terms
and Conditions) (“By placing an order, buyer authorizes seller to act on buyer’s behalf in arranging
for transportation of the wine….”); ROA.99 (Wine Express) (““By placing an order, you authorize
us to act on your behalf to engage a common carrier to deliver your order to you.”); ROA.125
(Bottle Deals) (“We will then arrange a common carrier for shipment….”) (Emphasis supplied). In
addition, Appellees’ terms and conditions provided that “if a shipment is damaged in transit we will
replace the product at no additional charge.” ROA.82 (Gold Medal); e.g., ROA.125 (Bottle Deals)
(“We guarantee our product quality and service. . . .”).
parking lot of the Oak Court Mall in Tennessee. The Mall consisted of bricks and mortar stores located in
Tennessee; it did not operate a commercially interactive website; and it did not direct the shipment of products
(lawful or unlawful) to Mississippi consumers located in Mississippi.
6 In fact, a single sale into the forum is sufficient to establish specific jurisdiction. Autotronic Controls
Corp. v. Davis Technologies, 2005 WL 1683595, at *2 (W.D. Tex., 2005) (“A single sale of a trademarked
product in violation of the Lanham Act in the forum is sufficient to establish personal jurisdiction.”); Ruston Gas
Turbines, Inc. v. Donaldson Co., Inc., 9 F.3d 415, 419 (5th Cir. 1993) (“A single act by the defendant directed
at the forum state…can be enough…if that act gives rise to the claim being asserted.”).
14
Arranging for and directing the shipment of alcohol into Mississippi violated state law.7 And
there should be no doubt that Appellees “did various acts here for the purpose of realizing a pecuniary
benefit or otherwise accomplishing an object.” Retail Coach, 2017 WL 875831, at *3.
The Contract Prong. A defendant is subject to jurisdiction under the contract prong of the
long-arm statute if the defendant entered into a contract with a Mississippi resident that is to be at least
partially performed in Mississippi. MISS. CODE ANN. § 13–3–57; Lta, Inc. v. Breeck, 2012 WL
12884873, at *1 (S.D. Miss. Apr. 25, 2012). Here, Appellees entered many contracts with many
Mississippi consumers, and those contracts were performed, at least in part, in Mississippi.
Indeed, Mississippi consumers sent payment while in Mississippi. See Sheridan, Inc. v. C. K.
Marshall & Co., 360 So. 2d 1223, 1225 (Miss. 1978). And acceptance of the contracts was made in
Mississippi. Hartford Acc. & Indem. Co. v. Delta & Pine Land Co., 188 So. 539, 542 (Miss. 1939);
Miller v. Glendale Equip. & Supply, Inc., 344 So. 2d 736 (Miss. 1977). Likewise, Appellees acted on
the buyer’s behalf and specifically directed the alcohol to be shipped to Mississippi residents.
No matter: Appellees predictably contend that the contract prong of the State’s long-arm statute
still cannot apply because Appellees “sold all goods at issue ‘FOB’.” App. Br. at 9. As explained,
though, FOB contractual terms neither control the substantive law nor the jurisdictional inquiry in this
civil enforcement action brought by the State.
7 Wine Freedom’s example on page 12 of their brief gets the facts and the law wrong. They pose the
example of a Mississippi resident leaving the State of Mississippi, buying alcohol from a bricks and mortar store
outside the State, and then unilaterally driving it into Mississippi. But having to resort to that example
demonstrates only why personal jurisdiction is proper here with respect to the Appellees.
The Internet wine retailers here set up sophisticated commercial ventures online. And, through their
commercially interactive websites, they sold alcohol to Mississippi residents located in Mississippi, and they
received a pecuniary benefit from their business with residents located in Mississippi. They further purposefully
directed shipments of alcohol to residents they knew were located in Mississippi. Still more, Appellees expressly
acted on the buyer’s behalf and arranged for the transportation of the alcohol to known Mississippi addresses.
15
Plus, Appellees’ FOB argument does not comport at all with the plain language of this State’s
long-arm statute. Section 13-3-57 provides that any “foreign or other corporation not qualified under
the Constitution and laws of this state as to doing business herein, who shall make a contract with a
resident of this state to be performed in whole or in part by any party in this state … shall by such act
or acts be deemed to be doing business in Mississippi[.]” (Emphasis supplied).
If the Mississippi Legislature had intended for who bears the expense of shipping and the
risk of loss in the transfer of goods to be dispositive of the contract prong of the long-arm statute, it
would have said that. But it didn’t.
Further, the case of Cycles, Ltd. v. W.J. Digby Inc., 889 F.2d 612 (5th Cir. 1989) does not
support Appellees’ position. See App. Br. at 10. That case stemmed from a sale-of-business transaction
gone awry between seller Cycles, Limited (Cycles) and buyer W.J. Digby, Inc. (Digby). And that sale-
of-business transaction generated a series of litigation (both in Mississippi and Arkansas).8
By way of background, Cycles was in the trucking business in West Memphis, Arkansas and
purchased refrigerated trailers and financed them through a series of notes through Navistar Financial
Corporation. In 1978, Cycles entered into an Authority and Equipment Lease and Purchase Agreement
with Digby (a Nevada corporation with its principal place of business in Colorado). Pursuant to this
agreement, the trailers financed by the notes were transferred by Cycles to Digby.
In September 1979, the Interstate Commerce Commission (“ICC”) approved the transfer of
the trailers from Cycles to Digby but required recharacterization of various portions of the agreement—
which caused adverse tax consequences for Digby. Digby appealed the ICC decision, but it was
affirmed, and Digby thus terminated the agreement with Cycles. Cycles, 889 F.2d at 615.
8 E.g., Cycles, Ltd. v. W.J. Digby Inc., 889 F.2d 612 (5th Cir. 1989); Cycles, Ltd. v. Navistar Financial
Corp., 37 F.3d 1088 (5th Cir. 1994); Cycles, Ltd. v. Navistar Financial Corp., 91 F.3d 139 (5th Cir. 1996).
16
Digby refused to make any further payments to Navistar on one of the notes and refused to
return the trailers to Cycles. Further, in 1981, Cycles was declared bankrupt as a result of Arkansas
bankruptcy proceedings. Prior to the adjudication of bankruptcy, though, Cycles had initiated a suit
against Digby for conversion of numerous trailers and other equipment.
Although the Fifth Circuit found personal jurisdiction lacking, that decision doesn’t carry
Appellees where they need to go—for a host of reasons. For starters, Digby didn’t operate and conduct
business via a commercially interactive website; it otherwise had no employees or assets in Mississippi;
and “the record contain[ed] no evidence of the frequency with which [Digby] hauled goods through
Mississippi.” Id. at 614. Moreover, while Cycles and Digby communicated via mail and telephone, the
communications only “pass[ed] between Colorado and West Memphis, Arkansas.” Id. Further, “in-
person negotiations” occurred in Arkansas and Tennessee. Id. Additionally, payment was “made in [ ]
Arkansas,” and “the location of the leased premises and equipment” was in Arkansas. Id. at 618.
Thus, contrary to the instant matter, no part of the contract in Cycles was to be performed in
whole or in part in Mississippi. The following comparison demonstrates as much:
CYCLES THIS CASE
No business transactions via an interactive
website.
A multitude of business transactions with Mississippi residents
located in Mississippi via commercially, interactive websites.
Lease and Purchase Agreement lawful
under state law.
Received a pecuniary benefit from unlawful contracts with
Mississippi residents to knowingly ship alcohol into Mississippi.
Phone calls were to and from Colorado
and Arkansas.
Business transactions over the Internet involved consumers
located in Mississippi.
Physical mail transmitted to and from
Colorado and Arkansas.
Emails and creation of consumer accounts involved consumers
located in Mississippi.
Negotiations in Arkansas and Tennessee. Acceptance of the contracts in Mississippi.
Payment was made in Arkansas. Mississippi consumers sent payment while located in
Mississippi.
The leased premises and equipment under
the contract were in Arkansas.
Internet wine retailers arranged for the shipment and
transportation of the alcohol to residential addresses in
Mississippi.
The contractual “services were to be
rendered outside of Mississippi.” Cycles,
889 F.2d at 619.
Internet wine retailers acted on the “buyer’s behalf” to ship the
alcohol and specifically arrange for the transportation of the
alcohol into Mississippi.
17
Accordingly, and unlike in Cycles, Appellees made contracts with Mississippi residents to
be performed in whole or in part by a party in Mississippi.
Tort Prong. Appellees make two arguments for why this prong of the long-arm statute isn’t
satisfied. First, they contend that a tort cannot be committed against the government. Second,
Appellees (again) claim that an FOB term controls the analysis. They’re wrong on both fronts.
To be sure, Appellees contend that “[t]orts are civil” and that torts are a “civil wrong for
which a remedy may be obtained.” App. Br. at 11. But this case is a civil action, and the State has
brought it so that a “remedy may be obtained.” Indeed, not every violation of law is enforced
criminally. Many times, violations are enforced via civil enforcement actions—like this one.
Plus, “[i]t is common ground that States have an interest, as sovereigns, in exercising the
power to create and enforce a legal code.” State of Alaska v. U.S. Dep’t of Transp., 868 F.2d 441,
443 (D.C. Cir. 1989) (quotations omitted); Vermont Agency of Natural Res. v. United States ex rel.
Stevens, 529 U.S. 765, 771 (2000) (explaining that the government suffers a cognizable “injury to
its sovereignty arising from violation of its laws”). Appellees repeatedly and knowingly violated this
State’s laws—and profited from it. Thus, they caused injury to the State of Mississippi in this State.
C. Exercising specific jurisdiction comports with Due Process.
Due process is afforded in the exercise of personal jurisdiction provided the defendant has
minimum contacts with the forum state, and provided maintaining the suit in the forum state will not
offend traditional notions of fair play and substantial justice. World-Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 291-92 (1980). These two aspects of Due Process are discussed in turn.
i. Appellees have minimum contacts with Mississippi.
A non-resident defendant cannot escape personal jurisdiction by arguing it does not have an
office or any employees in the forum state because “specific jurisdiction may arise without the
18
nonresident defendant[] ever stepping foot upon the forum state’s soil.” American Cable Corp. v.
Trilogy Communications, Inc., 754 So.2d 545, 551 (Miss. App. 2000). It is “the purposefulness of
the decision that is important and not the physical presence of the defendant in the state.” Id.
Here, it is clear from Appellees’ multiple sales to Mississippi residents and from their
interactive websites that minimum contacts with Mississippi are maintained. Each Appellee’s sales
support an inference of an affirmative, purposeful decision to avail itself of the privilege of
conducting business in Mississippi. See Mississippi Interstate Express, Inc. v. Transp., Inc., 681 F.2d
1003, 1007 (5th Cir. 1982). In their brief, however, Appellees spend less than two pages discussing
the minimum contacts inquiry in the context of interactive websites. App. Br. at 14-15. And what
little discussion they do provide is inept.
For instance, on pages 27-36 of the State’s opening brief, the State discussed the varying
tests courts have utilized to analyze Internet activity. Further, because the minimum contacts test is
grounded in federal due process concerns, the State pointed out that the Fifth Circuit has “adopted
Zippo’s sliding scale[.]” Retail Coach, 2017 WL 875831, at *4 n.3.
Nonetheless, Appellees do not provide an analysis of minimum contacts under Zippo.
Instead, they paternalistically declare that the State “failed to mention that the Fifth Circuit
has…recognized that the Zippo analysis is not always ‘well adapted to the general jurisdictional
inquiry[.].’” See App. Br. at 15 (citing Revell v. Lidov, 317 F.3d 467, 471 (5th Cir. 2002)). Two
points about this contention.
First, the State specifically cited to Revell and discussed the Zippo analysis in the context of
that case. See State Br. at 30-31 and n.27, 28. Second, and importantly, Appellees miss the point of
Revell. That case indicated that Zippo is not always “well adapted” for a general jurisdiction inquiry.
19
But this isn’t a general jurisdiction case. And, as Revell noted, “Zippo’s scale does more work with
specific jurisdiction—the context in which it was originally conceived.” Revell, 317 F.3d at 471.
In a similar vein, Appellees continue to stray far afield with their citation to a portion of Dunn
v. Yager, 58 So. 3d 1171 (Miss. 2011). See App. Br. at 14 (citing Dunn for the proposition that
contacts must be regular and continuous). In Dunn, a patient brought a medical malpractice action
against a physician who prescribed a medication that allegedly caused the patient to become blind.
When this Court discussed the defendant’s “regular and continuous contacts” with the forum,
it was analyzing the “exercise [of] general jurisdiction[.]” Id. at 1186 ¶ 34. Although this Court
discussed “specific jurisdiction” in paragraph 33, it did not have to analyze it because
“general personal jurisdiction [was] dispositive.” Id. 1186. Accordingly, Appellees’ continued effort
to conflate general and specific jurisdiction to try and dodge grappling with their forum contacts just
doesn’t work.
Indeed, here, the websites at issue are as interactive as it gets under any formulation of
Zippo—or under any other minimum contacts and specific jurisdiction inquiry.9 Mississippi
consumers located in Mississippi can (and did) view products, view prices, calculate shipping costs
using Mississippi zip codes, place orders, enter contracts, have accounts created for them, send and
receive emails, have the shipment of alcohol arranged for them, and have the shipment delivered to
9 See, e.g., Rice v. PetEdge, Inc., 975 F. Supp. 2d 1364, 1370–72 (N.D. Ga. 2013); Zing Bros., LLC v.
Bevstar, LLC, No. 2:11–cv–00337 DN, 2011 WL 4901321, at *3 (D. Utah Oct. 14, 2011); Fusionbrands, Inc.
v. Suburban Bowery of Suffern, Inc., No. 1:12–cv–0229–JEC, 2013 WL 5423106 (N.D. Ga. Sept. 26,
2013); Stomp, Inc. v. NeatO, LLC, 61 F. Supp. 2d 1074, 1078 (C.D. Cal. 1999); Variant, Inc. v. Flexsol
Packaging Corp., No. 6:08 CV 478, 2009 WL 3082581, at *2 (E.D. Tex. Sept. 21, 2009); Robinson v. Bartlow,
No. 3:12-CV-00024, 2012 WL 4718656, at *5 (W.D. Va. Oct. 3, 2012); Sarvint Techs., Inc. v. Omsignal, Inc.,
161 F. Supp. 3d 1250, 1261–62 (N.D. Ga. 2015). In contrast to these cases, and the others cited in the State’s
opening brief, Shippitsa Limited v. Slack, 2019 WL 277613, at *5 (N.D. Tex., 2019) is a very recent analysis of
Internet activity that is considered “passive” under Zippo and its progeny. Id.
20
them in Mississippi. And, all the while, Appellees profited thousands of dollars through their
connections with this State.
Next, Appellees turn to the 1977 district court case of R. Clinton Const. Co. v. Bryant &
Reaves, Inc., 442 F. Supp. 838 (N.D. Miss. 1977) for support. But that case is also unhelpful. See
App. Br. at 16-17. In R. Clinton, plaintiff Clinton (Missouri resident) requested that defendant
Bryant & Reaves, a Mississippi parts supplier, furnish a large quantity of antifreeze. The defendant
called Puryear (third party defendant) to supply the antifreeze. Puryear was also in the supply
business in Memphis, Tennessee. Puryear then contacted Kelly Chemical Company in Memphis to
supply and “arrange for shipment” of the requested antifreeze. Kelly (fourth party defendant) sold
the antifreeze, placed it into the stream of commerce, and arranged for the shipment “by common
carrier truck line.” Id. at 843, 851.
The facts and jurisdictional analysis in R. Clinton thus looked like this:
Pl. R. Clinton (Missouri) Def. Bryant & Reaves (Mississippi – no jurisdictional issue)
Third Party Def. Puryear (TN)
Fourth Party Def. Kelly (TN)
Simply put, neither the facts nor the law in R. Clinton support Appellees’ position here.
Lastly, the tactic of ignoring the interactivity of their websites and proffering an (incorrect)
analysis of the “stream of commerce” theory of personal jurisdiction is equally unavailing. App. Br.
at 15-16. Cases involving a standard stream-of-commerce analysis usually involve entities who
Puryear received one telephone call while in Tennessee.
No other interaction or any sales in Mississippi or with
Mississippi consumers.
Did not operate any Internet business.
And Kelly, not Puryear, was the one that “caus[ed] [the product]
delivery into Mississippi.” Id. at 851.
Found no jurisdiction but found the defense was waived.
Kelly received a phone call in Tennessee.
Did not operate any Internet business.
Kelly “caused [the product] to be placed in the stream of interstate
commerce, knowing it would cross state lines[.]” Id. at 851.
“[T]he material [was] shipped . . . by common carrier[.]” Id. at 843.
The court found “no jurisdictional problem regarding Kelly,” even
though only one product was delivered via “common carrier.”
21
cannot necessarily predict or control where downstream their products will land—intervening,
unconnected actors may take the products “to unforeseeable markets.” Plixer International, Inc. v.
Scrutinizer GmbH, 905 F.3d 1, 8 (1st Cir. 2018). Here, no intervening and unrelated actor brought
Appellees’ contraband product somewhere unexpected.
To be certain, this is not a case where the Internet wine retailers placed alcohol adrift in a sea
of commerce which randomly swept their products into Mississippi. Quite differently, the Internet
wine retailers here entered contracts with, and sold alcohol to, Mississippi residents while located in
Mississippi; allowed those residents to calculate shipping costs by entering Mississippi addresses;
communicated about Mississippi’s beverage control laws with the consumers; and acted on the
buyer’s behalf to arrange for the transportation of the alcohol into Mississippi.
With this, the Court has an “objectively clearer picture of [Appellees’] intent to serve the
forum, the crux of the purposeful availment inquiry.” Plixer International, Inc., 905 F.3d at 8; Ex
parte Lagrone, 839 So. 2d at 627 (“Fisher Products placed its products into the stream of commerce,
with not only the “expectation,” but with the actual knowledge that the products would be purchased
by consumers in this State.”); Tempur-Pedic Intern., Inc. v. Go Satellite Inc., 758 F. Supp. 2d 366,
376 (N.D. Tex. 2010) (“Go Satellite is not a victim of unilateral third-party conduct…Go Satellite
would have been aware that filling any orders made by persons with Texas addresses would mean
shipping the products to Texas in the stream of commerce.”) and id. at 376 (“[H]ad Go Satellite
wanted to exclude certain jurisdictions, it was able to refuse to deal with certain customers or to turn
down any orders after checking customer addresses. As Zippo itself notes, ‘If [the defendant] had
not wanted to be amenable to jurisdiction in [the forum state], the solution would have been simple—
it could have chosen not to sell its services to [forum-state] residents.’ Zippo, 952 F. Supp. at 1126–
27.”); see also State’s Br. at pp. 33-36 and n.35.
22
All in all, whether this Court adopts the Zippo analysis, or utilizes Zippo’s sliding scale as a
factor in the overall analysis, or simply analyzes the totality of the circumstances, the minimum
contacts test is satisfied here. Indeed, Zippo did not create its sliding scale from whole cloth—the
test is based on “well developed personal jurisdiction principles.” Zippo, 952 F. Supp. at 1124. Those
well developed principles subject Appellees to personal jurisdiction in Mississippi.
ii. Maintaining suit in Mississippi is consistent with notions of fair play and
substantial justice.
As discussed in the State’s opening brief, under the fair play and substantial justice inquiry,
the court focuses on (1) the burden on the defendant, (2) the interest of the forum state in adjudicating
the dispute, (3) the plaintiff’s interest in obtaining convenient and effective relief, (4) the efficient
resolution of controversies between the states, and (5) the shared interests of the states in furthering
fundamental, substantive social policies. Appellees do not provide any examination of these factors.
Because of this, the State’s original analysis on these points is unrebutted. See State Br. at 44-49.
To recap the analysis, though, the Internet wine retailers here set up sophisticated commercial
ventures online. They transacted business and gained a profit from Mississippi consumers by
violating state law. There can thus be no argument that they will be seriously burdened by defending
a lawsuit in Mississippi. Hemi, 622 F.3d at 760 (“Hemi wants to have its cake and eat it, too: it wants
the benefit of a nationwide business model with none of the exposure.”); South Dakota v. Wayfair,
Inc., 138 S. Ct. 2080, 2095 (U.S. 2018) (“This Court should not maintain a rule that ignores these
substantial virtual connections to the State.”).
What is more is that this is a suit brought by the State to enforce state law. Mississippi courts
certainly have a strong interest in providing a forum to resolve disputes involving the State itself.
Additionally, the States’ shared interests in furthering substantive social policies and the enforcement
23
of the States’ Twenty-First Amendment rights are advanced by Mississippi’s efforts to enforce
alcohol control laws.
II. THE DORMANT COMMERCE CLAUSE ARGUMENT CANNOT BE
CONSIDERED FOR THE FIRST TIME ON APPEAL, AND THE ARGUMENT IS
OTHERWISE MERITLESS.
The record on appeal in this matter is hundreds of pages. But if the Court searches for a
reference to the “Dormant Commerce Clause,” it will not find it. This is so because it wasn’t raised—
until now.
For good reason, this Court should not consider a federal constitutional defense raised for
the first time on appeal in a civil enforcement action brought by the State—especially where, as here,
the State’s action was wrongly dismissed at the jurisdictional stage. See, e.g., Mississippi State Fed.
of Colored Women’s Club Housing v. L.R., 62 So. 3d 351, 363 (Miss. 2010) (“This Court declines
to consider the constitutional argument, as it comes too late and is not properly before the Court.”);
Williams v. Skelton, 6 So. 3d 428, 430 (Miss. 2009); Powers v. Tiebauer, 939 So. 2d 749, 754–55
(Miss. 2005) (holding constitutional challenge raised for the first time on appeal, was barred).
Yet even if the Court were to address the Dormant Commerce Clause, Appellees reach only
a dead end with this new argument. The Commerce Clause operates both positively and negatively.
Positively and explicitly, it confers on Congress the power “[t]o regulate commerce…among the
several States[.]” U.S. CONST. art. I, § 8, cl. 3. Negatively and by implication, it restricts the power
of the states to regulate interstate commerce. This “dormant” aspect “prohibits economic
protectionism—that is, regulatory measures designed to benefit in-state economic interests by
burdening out-of-state competitors.” New Energy Co. of Ind. v. Limbach, 486 U.S. 269, 273 (1988).
Generally speaking, Dormant Commerce Clause analysis involves a two-step inquiry: the
first question is “whether a challenged law discriminates against interstate commerce.” Department
24
of Revenue of Ky. v. Davis, 553 U.S. 328, 338 (2008); United Haulers Ass’n., Inc. v. Oneida–
Herkimer Solid Waste Mgmt. Auth., 550 U.S. 330, 338 (2007) (“[W]e first ask whether [the law]
discriminates on its face against interstate commerce”); U.S. Technology Corporation v. MDEQ,
2016 WL 4098609, at *6 (S.D. Miss. July 28, 2016). Even if the law “discriminates on its face,” the
inquiry doesn’t end though. See Tennessee Wine and Spirits Retailers Association v. Thomas, 139 S.
Ct. 2449 (U.S. 2019).
Indeed, in light of the Twenty-First Amendment, courts “engage in a different inquiry.” Id.
at 2474. “Recognizing that § 2 was adopted to give each State the authority to address alcohol-related
public health and safety issues…we ask whether the challenged requirement can be justified as a
public health or safety measure or on some other legitimate nonprotectionist ground. Section 2 gives
the States regulatory authority that they would not otherwise enjoy[.]” Id. Here, Appellees fail at the
first step (and every other step) of the Dormant Commerce Clause inquiry.
To begin with, the only issue in Tennessee Wine was a “2-year durational-residency
requirement for license applicants.” Id. at 2476. Mississippi does not have a durational-residency
requirement. Moreover, under Mississippi law, all direct-to-consumer shipments of alcohol are
prohibited—from in-state and out-of-state businesses. See, e.g., MISS. CODE ANN. § 67-1-83(1)
(unlawful “to sell any alcoholic beverages except by delivery in person to the purchaser at the place
of business of the permittee”). The Dormant Commerce Clause argument thus fails from the start.
So, too, does the argument urged by the National Association of Wine Retailers. See Amicus
NAWR Br. at 9 (comparing Mississippi law to the law in Granholm v. Heald, 544 U.S. 460, 478
(2005)); see also App. Br. at 19. In Granholm, the Court considered regulations of two States that
permitted in-state wineries to ship their products directly to in-state consumers. 544 U.S. at 468–
70. The regulations at issue in Granholm worked to exempt in-state wineries—but not their out-of-
25
state competitors—from distributing their wines through wholesalers. Id. The Court determined
that “[t]he differential treatment between in-state and out-of-state wineries constitutes explicit
discrimination against interstate commerce.” Id. at 467.
Here, in-state and out-of-state businesses are treated the same: all direct-to-consumer
shipments of alcohol are prohibited. Thus, what Appellees actually seek is to confer favored status
on out-of-state businesses. But this would turn the Dormant Commerce Clause on its head.
In fact, both the Wilson Act and the Webb-Kenyon Act were enacted “to solve the problem”
of “confer[ing] favored status on out-of-state alcohol.” Tennessee Wine, 139 S. Ct. at 2465-66; id. at
2466 (Webb-Kenyon Act was enacted to “‘eliminate the regulatory advantage...afforded imported
liquor’”) (quoting Granholm, supra, at 482). Similarly, “the text of § 2 [of the Twenty-First
Amendment] ‘closely follow[ed]’ the operative language of the Webb-Kenyon Act, and this
naturally suggests that § 2 was meant to have a similar meaning.” Id. at 2467 (citations omitted).
Here, as discussed in the State’s opening brief, Mississippi’s law is precisely the type
contemplated by the Twenty-First Amendment. See State’s Br. at 6-10, 47-49. And while this Court
should not reach the Dormant Commerce Clause issue in this appeal, the argument is a non-starter
in any event.
CONCLUSION
For all of the reasons articulated here and in the opening brief, the Chancery Court of Rankin
County’s dismissal on personal jurisdiction grounds was reached in error. It thus should be reversed,
and the case should be remanded for further proceedings.
DATED this the 22nd day of July, 2019.
26
Respectfully Submitted,
JIM HOOD, ATTORNEY GENERAL
OF THE STATE OF MISSISSIPPI, ex rel.
THE STATE OF MISSISSIPPI, COMMISSIONER
OF REVENUE HERB FRIERSON, MISSISSIPPI
DEPARTMENT OF REVENUE
BY: JIM HOOD, ATTORNEY GENERAL
STATE OF MISSISSIPPI
By: /s/ Krissy C. Nobile
KRISSY C. NOBILE, MSB # 103577
STATE OF MISSISSIPPI
OFFICE OF THE ATTORNEY GENERAL
CIVIL LITIGATION DIVISION
Post Office Box 220
Jackson, Mississippi 39205
Telephone No.: (601) 359-3824
Counsel for Appellants
* Additional counsel listed on next page
27
JAMES A. BOBO, MSB # 3604
STATE OF MISSISSIPPI
OFFICE OF THE ATTORNEY GENERAL
CIVIL LITIGATION DIVISION
Post Office Box 220
Jackson, Mississippi 39205
Telephone: (601) 359-3822
Facsimile: (601) 359-2003
Email: [email protected]
DAVID J. CALDWELL, MSB # 100800
MISSISSIPPI DEPARTMENT OF REVENUE
Post Office Box 22828
Jackson, Mississippi 39225-2828
Telephone: (601) 923-7408
Facsimile: (601) 923-7423
Counsel for Appellants
28
CERTIFICATE OF SERVICE
I, Krissy C. Nobile, do hereby certify that I have electronically filed the foregoing document
with the Clerk of the Court using the MEC system, which sent notification to all counsel of record, and
mailed, via U.S. Mail, postage pre-paid to the following:
Honorable John Grant
Rankin County Chancery Court
203 Town Sq.
Brandon, MS 39042
THIS, the 22nd day of July, 2019.
/s/ Krissy C. Nobile___________________
Krissy C. Nobile